The end of the office affair?

Face value

Mar 10th 2005
From The Economist print edition

Harry Stonecipher and the perils of office romance

LAST month, America's National Law Journal told its readers that “employment lawyers are warning lovestruck co-workers to take precautions in the office before locking lips outside”. The advice came too late for Harry Stonecipher. The boss of Boeing was forced to resign last weekend—for reasons that will strike many outsiders as absurd—after his board were told of an affair that the 68-year-old married man had been conducting with a female employee “who did not report directly to him”.

Inevitably, as the week rolled on, details of the affair rolled out. The other party was reported to be Debra Peabody, who is unmarried and has worked for Boeing for 25 years. The couple were said to have first got together at Boeing's annual retreat at Palm Desert, California in January. After that much of the affair must have been conducted from a distance: Mr Stonecipher's office is at Boeing's headquarters in Chicago; Ms Peabody runs the firm's government-relations office in Washington, DC. They exchanged e-mails, it seems, as office lovers tend to do these days, and therein probably lay Mr Stonecipher's downfall.

Lewis Platt, Boeing's chairman, said that Mr Stonecipher broke a company rule that says: “Employees will not engage in conduct or activity that may raise questions as to the company's honesty, impartiality, reputation or otherwise cause embarrassment to the company.” Having an affair with a fellow employee is not, of itself, against company rules; causing embarrassment to Boeing is. It seems that the board judged that the contents of the lovers' e-mails would have been bad for Boeing had they been made public. Gone are the days when a board considered such matters none of its business, as Citibank's did in 1991 when its boss, John Reed, became the talk of Wall Street for having an affair with a stewardess on Citi's corporate jet.

At Boeing, a whistleblower is said to have forwarded the messages to Mr Platt. In general, e-mails are encrypted and not accessible to anyone who does not know the sender's password. But many firms install software designed to search electronic communications for key words such as, er, “sex” and “CEO”. A study last year of 840 American firms by the American Management Association found that 60% of them check external e-mails (incoming and outgoing), while 27% scrutinise internal messages between employees. Sweet nothings whispered by the water cooler may travel less far these days than electronic billets doux.

Boeing is particularly sensitive to embarrassment at the moment. Mr Stonecipher was recalled from retirement only 15 months ago, after the company's previous boss, Phil Condit, and its chief financial officer, Michael Sears, had left in the wake of a scandal involving an illegal job offer to a Pentagon official.

Just a couple of days before Mr Stonecipher's resignation, Boeing had been allowed by the US Air Force to bid again for rocket orders after being banned for several years following the discovery that former employees had stolen documents from a rival. In recent years, the company has become increasingly dependent on defence contracts as it has been overtaken in the commercial airline market by Airbus. Mr Stonecipher, a crusty former number two at Boeing, was brought back specifically to raise the company's ethical standards and to help it be seen in its main (and affectedly puritanical) market, in Washington, DC, as squeaky clean. Verbally explicit extra-marital affairs are inconsistent with such a strategy, it seems, though they are not yet enough to bring down future kings of England.

In corporate life, such affairs are hardly unusual. One survey found that one-quarter of all long-term relationships start at work; another found that over 40% of executives say they have been involved in an affair with a colleague, and that in half of these cases one or other party was married at the time. Many a boss has married his assistant and lived happily ever after. Boeing apparently used to accept this: Mr Condit's fourth wife was a colleague before they married.

Let him cast the first Stonecipher

It is only a slight exaggeration to say that office romance got a bad name, like so many things, from Enron, where loads of intra-office sex came with the territory for its masters of the universe. Jeffrey Skilling, its chief executive, had an extra-marital affair with Rebecca Carter, an Enron accountant whom he promoted to company secretary with annual pay of $600,000. To avoid such scenarios, which can lead to claims of favouritism, sexual harassment or discrimination, firms are increasingly devising official policies on how to handle relationships in the workplace.

Few try to ban them altogether, much as some corporate lawyers and human-resources staff might like to. But many firms insist on relocating one of the employees involved if they work in the same department. Some ask employees who start such a relationship to sign a contract. Called “cupid contracts” or “love contracts”, these bind signatories to behave reasonably and follow the company's formal complaints procedure should their affair break down. The headline to last month's National Law Journal article was “Workplace ‘love contracts' on the rise”.

The Harvard Business Review (HBR) once published a case study of a fictitious company called Glamor-a-Go-Go whose chief executive, Joe Ryan, cheated on his wife with, among others, a 24-year-old called Kimberly Crogan. Ms Crogan started her career in the office postroom but rose, via the boss's bedroom, to become a factory supervisor. Commentators on the case po-facedly pointed to the way in which bad behaviour in one area of life is likely to reflect bad judgment in others.

The article, entitled “A Question of Character”, was written in 1999 by Suzy Wetlaufer, later editor of the HBR and party to one of the most notorious CEO extra-marital affairs of recent years. Ms Wetlaufer is now the third wife of Jack Welch, for many years Mr Stonecipher's boss at General Electric.

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